A retrospective rating of workers' compensation insurance premiums is based on loss records from which time frame?

A retrospective rating of workers' compensation insurance premiums typically uses loss records from the last three years. This method allows for a more accurate assessment of the employer's risk and experience related to workers' compensation claims. By examining losses over this time frame, insurers can make adjustments to premiums that reflect the actual claims history of the business.

The three-year period offers a balance between having enough data to analyze trends and maintain relevance to the current operating environment. Shorter time frames, such as one or two years, might not capture the full scope of a business's risk profile, particularly if larger claims occur infrequently. On the other hand, extending the timeframe to five years could dilute the relevance of older claims, as organizational changes or business dynamics could significantly alter the risk landscape. This makes the three-year approach particularly suitable for accommodating fluctuations in claims frequency or severity.